- Tertiarization Like China
We document a process of rapid tertiarization of the Chinese economy since 2005. The employment and value-added shares of the service sector have increased significantly. Moreover, total factor productivity growth has increased faster in the service sector than in the manufacturing sector. Measures of dynamism at the firm level confirm the growing importance of tertiarization. The boom is not limited to services that are used as inputs to industrial production. Consumer services have also grown significantly in terms of both value-added share and productivity. The results are robust to different growth accounting methodologies, including the recent method proposed by Fan, Peters, and Zilibotti (2022) that gets around potentially problematic official price indexes.